High Deductible Health Plan (HDHP)

1
High Deductible Health Plan (HDHP)Health
Savings Account (HSA)

• Monroe County Community School Corporation
• 2009

Click here for Audio on each slide
2
(No Transcript)
3
What are Health Savings Accounts?

• Congress created Health Savings Accounts (HSAs)
  to help individuals save for qualified medical
  and retiree health expenses on a tax-free basis.
• Pairs a qualified high deductible health plan
  with a savings account for eligible individuals
  to help pay for qualified medical expenses
• Combines the pre-tax treatment of a health
  flexible spending account, the portability and
  carry-over characteristics of a 401(k) plan, and
  the tax-free distribution of a Roth IRA

4
What are Health Savings Accounts?

• For eligible individuals it is
• Very similar to a personal checking/savings
  account that is owned by you, the account holder,
  and used to pay for qualified medical expenses
• You can elect an amount to be payroll deducted
  pre-tax from MCCSC to fund the account
• The HSA is a custodian account held at a
  trustee/bank/Insurance company
• Account balances can be carried over year to year

5
Who is Eligible?

• To be eligible to contribute to an HSA you
• Must be covered by a qualified high deductible
  health plan (HDHP) MCCSC Medical Plan 3 only
• Cannot be enrolled in Medicare (generally age 65)
• Cannot be covered by other health insurance that
  is not an HDHP
• Additional coverage for dental and vision is
  allowed
• Cannot have a broad based health Flexible
  Spending Account through employer or spouses
  employer
• Cannot be eligible to be claimed as a dependent
  on another persons taxes
• May not participate in both Section 125 FSA
  (Medical) HSA
• Can participate in a Dependent Care FSA HSA

6
How Does the HSA Work?

• You enroll in the qualified high deductible
  health plan
• MCCSC will have established the banking account
  for your HSA
• You make contributions to the account through
  payroll deduction (pre-taxed)
• You receive health care services
• You pay your out of pocket costs associated with
  your health plan (deductible and coinsurance)
• You decide whether to take money out of your HSA
  account to reimburse yourself for qualified
  expenses
• The money in your HSA account that you do not use
  stays with you and is available to use for future
  costs

7
What are Qualified Expenses?

• Qualified Medical Expenses are described in
  section 213(d) of the Internal Revenue Service
  code
• Refer to IRS Publication 502 for examples
• Health insurance premiums are not a qualified
  medical expense except
• For HSAs, the following can be reimbursed
  tax-free
• COBRA premiums
• Qualified long term care premiums
• Health insurance premiums while unemployed and
  receiving unemployment
• Medicare premiums (Part A, B, C, D)

8
(No Transcript)
9
How Much Can I Contribute to an HSA?

• The IRS determines the annual contribution
  limits
• for HSA. These are based on either single
  or family enrollment. The contribution limits
  can change from year to year. For 2010 you may
  contribute up to
• 3,050 Single
• 6,150 Family
• Individuals age 55 and older can also make
  additional catch-up contributions of 1,000
  per year.

10
Pros to Consider

• Pros
• Tax savings
• Potential retirement savings
• More control over how you choose to spend your
  health care dollars
• Can help cover health expenses for periods of
  unemployment
• Lower health plan premiums
• HSA belongs to you and is portable Employees
  currently contributing to Section 125 FSA could
  deposit that same amount in an HSA. With the
  HSA, there is no use it or lose it rule

11
Cons to Consider

• Cons
• Employee is responsible for tracking expenses,
  monitoring HSA contributions/distributions
• Must become better healthcare consumer
• Could result in higher out-of-pocket expenses,
  especially if you dont fully fund your HSA

12
In Summary

• Individuals must be eligible to contribute to an
  HSA not required for distributions
• The individual is responsible for compliance with
  IRS rules
• If you dont use your HSA money, you keep it for
  future years.
• Contributions are subject to limits determined in
  reference to HDHP annual deductible and statutory
  limits
• Contributions are tax free, earnings are tax
  free, and distributions are tax free if used for
  qualifying medical expenses

13
Flow Chart for HSA Process
Qualified High Deductible Plan 3 HSA
Filing of Medical/Dental Claims and Use of HSA
account
Pre-Tax Payroll Deductions
Employee goes to Dr
Premium for Plan 3
HSA Employee Contribution Any elected amount by
employee up to the max of 3050 for single plan
and 6150 for family plan
Provider files the claim with Anthem as normal
Anthem processes with in-network discount
Employee receives EOB explaining their
responsibility Which is 100 after Anthem
discount up to the deductible 3,000 single
plan and 6,000 for the family plan
There must be funds available through your
contributions to pay for the qualified medical
expenses You only have available what you have
contributed very different from a FSA
Employee receives bill from provider
Employee pays bill through HSA funds (Debit card
or checks) Just like personal checking account
14

• By taking time to understand how each of the
  Group Health Plan options affect you and your
  family, you can make an informed choice that will
  best meet your healthcare and financial needs.
• Its Your Money!

15
Questions?

• For more information, please refer to the United
  States Department of Treasury website
• http//www.ustreas.gov/offices/
  public-affairs/hsa/